Do Legacy Construction Companies Have the Inside Track on Modular Building?

Fresh-faced, tech-oriented startups get most of the attention in the modular-building world, but despite their “it” factor, they’re still startups. Is there a market share in modular just waiting for companies with the approach and know-how that come with legacy experience?

Chicago-based legacy construction company Skender has been researching modular construction for years and is now getting in the game. In late November 2018, it invited a gaggle of reporters and industry representatives to its 106,000-square-foot factory space on Chicago’s southwest side for a look at its prototype modular apartment. When the new venture is up and running, the company pledges to employ 100 people to produce 2,500 modules per year, at a rate 30 to 40 percent faster and at a cost 10 to 20 percent less than traditional construction.

The apartment prototype was made traditionally with a series of subcontractors, but the Skender production line will operate radically differently, says CEO Mark Skender: “It’s all Skender labor, buying directly from the supply chain.” There will be no subcontractors. Parts and components will ship to the site or be made and modified there.

Skender Chief Design Officer Tim Swanson has a simple mandate for the company’s successful push into modular construction: “If there’s a tape measure or a saw on the factory floor, we did it wrong,” he says. “This is not an indoor construction site.” The factory will be an assembly line for unit modules to be fabricated, outfitted, and shipped to the site, where they will be stacked into buildings and finished for occupancy.

Skender is proposing a unified process that allows for flexibility and mass customization, including variable MEP systems, facades, and interior finishes. But the steel base chassis will be the same and will arrive on each building site with the flooring, paint, and fixtures already in place.

The Skender modules are meant to ship via truck virtually completed. Swanson anticipates some stresses and cracking that will need to be patched, “but then it’s a material-science question,” he says.

Swanson is the rare designer who invites risk and experimentation into his work. Skender hired him away from CannonDesign, where he was the youngest office leader in the company’s 100-year history, and acquired a small architecture firm to work as his team. He joins Peter Murray, Skender’s manufacturing chief, who’s spent his career in manufacturing.

Vertical integration is key to Skender’s modular foray, combining design, construction, and manufacturing under one roof. And that’s where an established legacy general contractor has a critical edge. By acquiring and developing these assets en masse, it can arrive on the scene with the scale and breadth to vertically integrate, instead of having to build out this capacity along with its very first products.

Mark Skender says that decades of experience have shown him what can be built in the factory and what needs to be built in the field. A large company like Skender can assume risk over the entire design and construction process, avoiding silos created by risk aversion. Swanson says that instead of a loose network of overlapping subcontractors trying to push the risk that comes with experimentation off onto other parties, a unified team at Skender can work cooperatively, without a defensive bunker mentality.

A byproduct of this process would be continual refinement of products—a benefit largely absent in the wasteful and inefficient construction industry, yet omnipresent in other manufacturing sectors. “It’s just like what any automotive company would do; the next generation of its car is going to be better than the last,” Skender says. “That is the vision for what we’re looking to do with vertical integration. That’s what’s totally missing in our industry—the ability to learn and to improve the design and the production systems.”

With these efficiencies of scale and repetition, Skender hopes to make an impact on the chronic lack of affordable housing. Housing for the poorest Americans will require deep subsidies for the foreseeable future—but by producing new homes for moderately less money, which could then be rented for less money, Skender’s model could meet a need for people making just below average incomes, slowing the cascading affordability gap. The goal is “naturally occurring affordable housing,” Swanson says.

Skender’s initial modular projects will be Chicago apartment buildings: One of the first will be in the West Loop neighborhood, containing 122 units and reaching six to seven stories. The company anticipates that these modular units can be stacked 12 stories high, with no need for additional superstructure. Each has a fully load-bearing steel frame that can be bolted to another, complete with burly cross braces. Skender is currently working with Autodesk on automated welders to augment the production of these steel chassis.

Inside the prototype, Skender elected to use luxury finishes for its proof of concept: porcelain tile in the bathroom, pale wood cabinetry, and quartz countertops. (Swanson estimates that a Skender modular unit will cost buyers $250 per square foot, all built with union labor.) Panels of dark grey brick are clipped onto the steel frame, and steel struts let visitors peer below the floor, through the consolidated utilities connections at the rear bathroom. The largest bit of wall art (a photo of steel legs hoisting up Chicago’s iconic elevated trains) nods to the project’s steel adoration.

Additionally, Skender will produce three-flats, a vernacular Chicago housing type that stacks three apartments onto the footprint of a house. The company will offer six to 12 facade options, and it anticipates that these homes could be built in as little as two months. The company is also looking to build commercial and health-care facilities that are suited to its modular approach, such as offices and patient rooms. With one health-care client already on the books, “We’re starting to imagine a future where a hospital could potentially be a whole host of providers, contributing all the pieces that get bolted together,” Swanson says.

The Skender prototype was designed using Autodesk Revit, and Swanson says this digital model will be a “single source of truth” to guide design, construction, and deployment. That same model will drive the augmented-reality model that potential customers and industry partners will be able to explore in the factory’s virtual-reality studio. It will also be the same model automated welders read through to produce each chassis, “the thing that we calibrate the entire line for,” Swanson says. And given Skender’s goals for continual, iterative improvement, these digital recalibrations could echo in the real world as quickly as stacking and bolting a Skender modular building.